Baidu (NASDAQ:BIDU) and Snap (NYSE:SNAP) Critical Analysis

Snap (NYSE:SNAP) and Baidu (NASDAQ:BIDU) are both communication services companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, risk, profitability and dividends.

Volatility & Risk

Snap has a beta of 1.23, suggesting that its stock price is 23% more volatile than the S&P 500. Comparatively, Baidu has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Snap and Baidu, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Snap	2	22	11	1	2.31
Baidu	3	4	12	0	2.47

Snap presently has a consensus target price of $7.71, suggesting a potential upside of 30.35%. Baidu has a consensus target price of $144.27, suggesting a potential upside of 79.37%. Given Baidu’s stronger consensus rating and higher possible upside, analysts clearly believe Baidu is more favorable than Snap.

Valuation & Earnings

This table compares Snap and Baidu”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Snap	$5.93 billion	1.69	-$460.49 million	($0.18)	-32.86
Baidu	$18.46 billion	1.48	$799.00 million	($2.11)	-38.12

Baidu has higher revenue and earnings than Snap. Baidu is trading at a lower price-to-earnings ratio than Snap, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Snap and Baidu’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Snap	-4.90%	-14.61%	-4.12%
Baidu	-2.63%	4.30%	2.64%

Insider and Institutional Ownership

47.5% of Snap shares are held by institutional investors. 22.7% of Snap shares are held by insiders. Comparatively, 16.7% of Baidu shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Baidu beats Snap on 8 of the 14 factors compared between the two stocks.

About Snap

Snap Inc. operates as a technology company in North America, Europe, and internationally. The company offers Snapchat, a visual messaging application with various tabs, such as camera, visual messaging, snap map, stories, and spotlight that enable people to communicate visually through short videos and images. It also provides Spectacles, an eyewear product that connects with Snapchat and captures photos and video from a human perspective; and advertising products, including AR ads and Snap ads comprises a single image or video ads, collection ads, dynamic ads, story ads, and commercials. The company was formerly known as Snapchat, Inc. and changed its name to Snap Inc. in September 2016. Snap Inc. was founded in 2010 and is headquartered in Santa Monica, California.

About Baidu

Baidu, Inc. engages in the provision of internet search services in China. It operates through two segments: Baidu Core and iQIYI. The company offers Baidu App to access search, feed, and other services using mobile devices; Baidu Search to access its search and other services; Baidu Feed that provides users with personalized timeline based on their demographics and interests; Baidu Health that helps users to find the doctor and hospital for healthcare needs; and Haokan, a short video app. It also provides Baidu Knows, an online community where users can ask questions to other users; Baidu Wiki; Baidu Experience; Baidu Post; ERNIE Bot, conversational AI bot; Baidu Wenku; Baidu Maps, a voice-enabled mobile app that provides travel-related services; Baidu Drive; Baijiahao; and DuerOS, a smart assistant platform. In addition, it offers online marketing services, which include pay for performance, an auction-based services that allow customers to bid for priority placement of paid sponsored links and reach users who search for information related to their products or services; other marketing services that include display-based marketing services and other online marketing services based on performance criteria other than cost per click; mobile ecosystem, a portfolio of apps, including Baidu App, Haokan, and Baidu Post; various cloud services and solutions, such as platform as a service, software as a service, and infrastructure as a service; self-driving services, including maps, automated valet parking, navigation pilot, electric vehicles, and robotaxi fleets, as well as Xiaodu smart devices. Further, the company provides iQIYI, an online entertainment service, including original and licensed content; other video content and membership; and online advertising services. It has strategic partnership with Zhejiang Geely Holding Group. The company was formerly known as Baidu.com, Inc. Baidu, Inc. was incorporated in 2000 and is headquartered in Beijing, China.